A gas tax holiday is still a bad idea
Back in February, I wrote that the DFL’s gas tax holiday is a bad idea. Even as gas prices continue to rise and it becomes more popular, it remains a bad idea even when Republicans propose it:
As I argued in February:
First, Minnesota’s gas tax is one of the few taxes in our state which isn’t that high compared to others. The Tax Foundation ranks us 26th on this measure, with a gas tax of 28.5 cents a gallon. As a result, eliminating the gas tax would only take gas prices in Minnesota back to the level of Jan. 10 this year, according to figures from the Energy Information Administration. [Note: Enacted now, such a cut would only take us back to the pump prices of May 30.]
Second, the gas tax contributes to the upkeep of the state’s roads and bridges. It is one of the taxes most nearly approximating a fee. But, as cars have become more fuel efficient and more electric cars have hit the roads, the amount of gas tax revenue per mile driven on Minnesota’s roads has fallen. So, it is reasonable to assume that the amount of revenue the gas tax provides to fix wear and tear on roads and bridges has fallen more than the amount of actual wear of tear on those roads and bridges. Indeed, as a permanent policy fix, it would make sense to adjust the gas tax for factors such as improved gas mileage and more electric vehicles.
More fundamentally, the surge in gas prices is caused by an increase in demand relative to supply. The problem is this underlying mismatch and it is that which needs to be fixed. The price is not the problem; rather, it is both a signal that this mismatch exists and an incentive to fix it.
Rocketing gas prices are a serious worry for many Americans. But this problem demands real solutions, not the waving of non-existent magic wands, however politically attractive.